President Uhuru Kenyatta said generation would bank on geothermal, wind, natural gas and other cheaper energy sources to reduce the cost of electricity to Sh9.10 (¢10.45) per kilowatt hour from the current average of Sh17.20 (¢19.78) per unit for domestic households.

“The shift will reduce the cost of doing business and make Kenya one of the low-cost countries,” said Mr Kenyatta on Monday in a speech read on his behalf by Energy Cabinet secretary Davis Chirchir.

Kenya plans to add 5,000 megawatts to its grid by the end of 2016, with geothermal power accounting for almost a third or 1,646 megawatts while wind will load 630 megawatts.

Over-reliance on hydro-power, which is susceptible to weather changes, means dependence on thermal plants for emergency power during droughts, increasing the cost of power.

The country’s total energy mix is 1,708 megawatts, with hydro making up half or 808 megawatts. Diesel-fired plants, which account for a third of Kenya’s power basket or 542 megawatts, deliver energy at a cost of between Sh22.60 and Sh31.30 (US cents 26-36), pushing up the price of power.

“Their contribution increases during dry hydrology, making electricity even more expensive,” said Mr Chirchir.

The strategy to tilt the energy mix in favour of steam and wind energy is guided by the fact that their generation is not affected by extreme climatic conditions such as drought and floods.

A study by global consulting firm McKinsey & Co shows that geothermal, despite carrying a high capital cost, is the cheapest and most sustainable energy option for Kenya.

The report says generating steam power costs Sh5.60 (6.4 US cents), half the price of hydro-power which costs Sh10.90 (¢12.5) per kilowatt hour.

The Kenya Electricity Generating company (KenGen) is currently developing four power plants at Olkaria I and Olkaria IV unit to generate 280 megawatts at a cost of Sh109.5 billion ($1.3 billion), billed the continent’s biggest underground steam power project.

KenGen acting managing director Simon Ngure confirmed that project would be completed by September next year as planned.

Mr Chirchir also announced the development of a natural gas-powered plant in Mombasa County to generate a total of 1,050 megawatts.

The Ministry of Energy said it had conducted feasibility studies for a 450 megawatt gas-fired plant to be built at Dongo Kundu. Another plant will be developed in Changamwe. Liquefied Natural Gas is considered a cheap and clean source of energy.